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CVR 29 60 38 63

MYC4 A/S

ANNUAL REPORT

2010

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MYC4 A/S

Annual Report 2010

Contents 1. MYC4 – Eradicating Poverty through Business ...................................................................... 3

2. Company Details .................................................................................................................... 4

3. Statement by Management on the Annual Report .................................................................. 5

4. Independent Auditor‟s Report ................................................................................................ 6

5. Management Review .............................................................................................................. 9

5.1 Summary ....................................................................................................................................... 9

5.2 Main Activities 2010....................................................................................................................... 9

5.3 Partner Status............................................................................................................................... 11

5.4 Overview of Portfolio by year-end 2010 ...................................................................................... 12

5.5 Social Impact ............................................................................................................................... 14

5.6 Financial Results 2010.................................................................................................................. 15

5.7 Outlook for 2011 .......................................................................................................................... 15

5.8 Events after the Balance Sheet Date ............................................................................................ 16

6. Accounting Policies .............................................................................................................. 17

6.2 Income statement ........................................................................................................................ 17

6.3 Balance sheet .............................................................................................................................. 18

7. Income Statement 2009......................................................................................................... 21

8. Balance sheet December 31 2009 ........................................................................................ 22

Notes ......................................................................................................................................... 24

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1. MYC4 – Eradicating Poverty through Business

Africa is among the world‟s most rapidly growing economic regions, with real GDP rising 5

percent per year since 2000. MYC4 is a solution to the paradigm that Africa represents an

enormous untapped business potential, yet investment opportunities in Africa are hard to

access due to incomplete financial markets, with 80% of the adult African population having

no bank account.

MYC4 is an online Peer-to-Peer platform providing loans at fair price to micro- and small

businesses in Africa and social- as well as economical return to the crowd funding investors.

MYC4 is matching people with need for capital and people with means to invest, fueled by:

• providing Investors access to risk/return adjusted investments with social impact

• enabling African business to attract capital at market conditions and grow their business

The online platform is built around a network of African Financial Partners who are

responsible for identifying and screening for sound businesses as well as handling all

financial transactions. The Partners are incentivized to provide best possible economic pro-

spects for return to Investors and simultaneously social impact.

MYC4 is a business, based on servicing volumes of loans via the online platform. MYC4

charges a fee and an interest to the African Business for providing the loan and facilitating

the financial transactions.

Our vision is to end poverty through business. We want to ensure that everyone has

access to capital and knowledge on equal terms.

Our mission is to create prosperity for all by using modern technologies to

bridge the gap between people with needs and people with means. We want to ignite

entrepreneurship and fuel business potential across cultures and continents.

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2. Company Details

Company

MYC4 A/S

Sank Annæ Plads 19A,2.

DK-1250 Copenhagen K

Central Business Registration No: 29 60 38 63

Registered in Copenhagen

Phone: +45 70 26 20 15

Internet: www.myc4.com

Company Auditors

PricewaterhouseCoopers

Board of Directors

Niels B. Thuesen, Chairman

Jørgen Horwitz

Vagn Berthelsen

Susan Payne

Executive Management

Mads Kjær, CEO and Co-founder

Tim Vang, Deputy CEO and Co-founder

The General Annual Meeting adopted the Annual Report on May 23, 2011

Chairman of the General Annual Meeting

Niels B. Thuesen

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3. Statement by Management on the Annual Report

We have today presented the Annual Report of MYC4 A/S for the financial year January 1 to

December 31, 2010.

The Annual Report has been presented in accordance with the Danish Financial Statements

Act. We consider the applied accounting policies appropriate for the annual report to

provide a true and fair view of MYC4‟s financial position and results.

We also consider the Management Review to give a fair presentation of the development in

MYC4‟s activities and finances, profit and loss for the year, its financial position as a whole as

well as a description of the most material risks and elements of uncertainty facing MYC4.

We recommend the annual report for adoption at the Annual General Meeting.

Copenhagen, 28 March 2011

Executive Management

Mads Kjær,

CEO and Co-founder

Tim Vang,

Deputy CEO and Co-founder

Board of Directors

Niels B. Thuesen

Chairman

Jørgen Horwitz

Vagn Berthelsen

Susan Payne

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4. Independent Auditor’s Report

To the Shareholders of MYC4 A/S

We have audited the Financial Statements

and of MYC4 A/S for the financial year 1 Jan-

uary 2010 – 31 December 2010. The Finan-

cial Statements comprise Income Statement,

Balance Sheet, Notes and Accounting Poli-

cies. The Financial Statements are prepared

in accordance with the Danish Financial

Statements Act. Management‟s Review,

which is not comprised by the audit, is pre-

pared in accordance with the Danish Finan-

cial Statements Act.

Til aktionærerne i MYC4 A/S

Vi har revideret årsregnskabet for MYC4

A/S for regnskabsåret 1. januar 2010 – 31.

december 2010. Årsregnskabet omfatter

resultatopgørelse, balance, noter og

anvendt regnskabspraksis. Årsregnskabet

aflægges efter årsregnskabsloven.

Ledelsesberetningen, der ikke er omfattet af

revisionen, aflægges efter

årsregnskabsloven.

Management’s Responsibility

Management is responsible for the prepara-

tion and fair presentation of the Financial

Statements in accordance with the Danish

Financial Statements Act. This responsibility

includes: designing, implementing and

maintaining internal control relevant to the

preparation and fair presentation of Finan-

cial Statements that are free from material

misstatement, whether due to fraud or error.

The responsibility also includes selecting

and applying appropriate accounting poli-

cies, and making accounting estimates that

are reasonable in the circumstances. Fur-

thermore, Management is responsible for

preparing a Management‟s Review that in-

cludes a true and fair account in accordance

with the Danish Financial Statements Act.

Ledelsens ansvar

Ledelsen har ansvaret for at udarbejde og

aflægge et årsregnskab, der giver et

retvisende billede i overensstemmelse med

årsregnskabsloven. Dette ansvar omfatter

udformning, implementering og

opretholdelse af interne kontroller, der er

relevante for at udarbejde og aflægge et

årsregnskab, der giver et retvisende billede

uden væsentlig fejlinformation, uanset om

fejlinformationen skyldes besvigelser eller

fejl. Ansvaret omfatter endvidere valg og

anvendelse af en hensigtsmæssig

regnskabspraksis og udøvelse af

regnskabsmæssige skøn, som er rimelige

efter omstændighederne. Ledelsen har

endvidere ansvaret for at udarbejde en

ledelsesberetning, der indeholder en

retvisende redegørelse i overensstemmelse

med årsregnskabsloven.

Auditor’s Responsibility and Basis of

Opinion

Our responsibility is to express an opinion

on the Financial Statements based on our

audit. We conducted our audit in accordance

with Danish Auditing Standards. Those

Standards require that we comply with ethi-

cal requirements and plan and perform the

audit to obtain reasonable assurance wheth-

er the Financial Statements are free from

material misstatement.

An audit involves performing procedures to

obtain audit evidence about the amounts and

Revisors ansvar og den udførte revision

Vores ansvar er at udtrykke en konklusion

om årsregnskabet på grundlag af vores

revision. Vi har udført vores revision i

overensstemmelse med danske

revisionsstandarder. Disse standarder

kræver, at vi lever op til etiske krav samt

planlægger og udfører revisionen med

henblik på at opnå høj grad af sikkerhed for,

at årsregnskabet ikke indeholder væsentlig

fejlinformation.

En revision omfatter handlinger for at opnå

revisionsbevis for de beløb og oplysninger,

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disclosures in the Financial Statements. The

procedures selected depend on the audi-

tor‟s judgment, including the assessment of

the risks of material misstatement of the Fi-

nancial Statements, whether due to fraud or

error. In making those risk assessments, the

auditor considers internal control relevant to

the Company‟s preparation and fair presen-

tation of the Financial Statements in order to

design audit procedures that are appropri-

ate in the circumstances, but not for the pur-

pose of expressing an opinion on the effec-

tiveness of the Company‟s internal control.

An audit also includes evaluating the appro-

priateness of accounting policies used and

the reasonableness of accounting estimates

made by Management, as well as evaluating

the overall presentation of the Financial

Statements.

We believe that the audit evidence we have

obtained is sufficient and appropriate to

provide a basis for our audit opinion.

Our audit has not resulted in any qualifica-

tion.

der er anført i årsregnskabet. De valgte

handlinger afhænger af revisors vurdering,

herunder vurderingen af risikoen for

væsentlig fejlinformation i årsregnskabet,

uanset om fejlinformationen skyldes

besvigelser eller fejl. Ved risikovurderingen

overvejer revisor interne kontroller, der er

relevante for virksomhedens udarbejdelse

og aflæggelse af et årsregnskab, der giver

et retvisende billede med henblik på at

udforme revisionshandlinger, der er

passende efter omstændighederne, men

ikke med det formål at udtrykke en

konklusion om effektiviteten af

virksomhedens interne kontrol. En revision

omfatter endvidere stillingtagen til, om den

af ledelsen anvendte regnskabspraksis er

passende, om de af ledelsen udøvede

regnskabsmæssige skøn er rimelige, samt

en vurdering af den samlede præsentation

af årsregnskabet.

Det er vores opfattelse, at det opnåede

revisionsbevis er tilstrækkeligt og egnet

som grundlag for vores konklusion. Revi-

sionen har ikke givet anledning til forbe-

hold.

Opinion

In our opinion, the Financial Statements give

a true and fair view of the financial position

of the Company at 31 December 2010 and of

the results of the Company operations for

the financial year 1 January 2010 - 31 De-

cember 2010 in accordance with the Danish

Financial Statements Act.

Konklusion

Det er vores opfattelse, at årsregnskabet

giver et retvisende billede af selskabets

aktiver, passiver og finansielle stilling pr. 31.

december 2010 samt af resultatet af

selskabets aktiviteter for regnskabsåret 1.

januar 2010 - 31. december 2010 i

overensstemmelse med årsregnskabsloven.

Emphasis of matter

Emphasis of matters concerning issues in

the annual report

As mentioned in Management‟s Review the

Company has lost its entire share capital.

We draw attention to Management‟s descrip-

tion of how the share capital is expected to

be re-established.

Without qualifying our auditor‟s report, we

draw attention to the information in Man-

agement‟s Review, the section “Outlook

2011” in which Management describes the

Supplerende oplysninger

Supplerende oplysninger vedrørende

forhold i regnskabet

Som omtalt i ledelsesberetningen har

selskabet tabt hele selskabskapitalen. Der

henvises til ledelsens redegørelse for,

hvorledes selskabskapitalen forventes

reetableret.

Uden at tage forbehold gør vi opmærksom

på oplysningerne i ledelsesberetningen,

afsnit ”Outlook 2011”, hvori ledelsen

redegør for forudsætningerne for selskabets

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assumptions for the Company‟s future capi-

tal resources and the uncertainty associated

with them.

In addition, we draw attention to the balance

sheet item “Development costs” showing

that the Company has capitalised a devel-

opment project concerning the MYC4 plat-

form at a total value of DKK 5.7 million. The

determination of the value of the asset de-

pends on the company‟s future earnings ca-

pabilities.

fremtidige kapitalberedskab og

usikkerheden knyttet hertil.

Herudover gør vi opmærksom på

balanceposten ”Development costs”, hvoraf

det fremgår, at selskabet har aktiveret et

udviklingsprojekt vedrørende MYC4

platformen til en samlet værdi på DKK 5,7

mio. Berettigelsen af dette aktivs værdi

afhænger af selskabets fremtidige

indtjeningsevne.

Emphasis of matters concerning other

issues

The Company has not settled and paid pay-

roll tax for the period 2006 - 2010. Manage-

ment may incur liability for failure to pay

payroll tax.

We draw attention to the fact that contrary to

section 6(1) of the Danish Executive Order

on the Filing and Publication of the Annual

Reports issued by the Danish Commerce

and companies Agency, Management has

chosen not to present the Annual Report in

Danish but has instead chosen to present the

Annual Report in English, which is the lan-

guage applied in the Company.

Supplerende oplysninger vedrørende

andre forhold

Selskabet har ikke afregnet og indbetalt

lønsumsafgift for 2006 - 2010. Ledelsen kan

ifalde ansvar for manglende indbetaling af

lønsumsafgift.

Vi gør opmærksom på, at ledelsen i strid

med bekendtgørelse om indsendelse og

offentliggørelse af årsrapporter i Erhvervs-

og Selskabsstyrelsen § 6, stk.1, har valgt

ikke at aflægge årsrapporten på dansk, men

har i stedet valgt at aflægge årsrapporten på

engelsk, som er det sprog, der dagligt

anvendes i virksomheden.

Statement on Management’s Review

We have read Management‟s Review in ac-

cordance with the Danish Financial State-

ments Act. We have not performed any pro-

cedures additional to the audit performed of

the Financial Statements. On this basis, in

our opinion, the information provided in

Management‟s Review is in accordance with

the Financial Statements.

Udtalelse om ledelsesberetningen

Vi har i henhold til årsregnskabsloven

gennemlæst ledelsesberetningen. Vi har

ikke foretaget yderligere handlinger i tillæg

til den gennemførte revision af

årsregnskabet. Det er på denne baggrund

vores opfattelse, at oplysningerne i

ledelsesberetningen er i overensstemmelse

med årsregnskabet.

Hellerup, 23 May 2011

PricewaterhouseCoopers

Statsautoriseret Revisionsaktieselskab

Mikael Sørensen Preben Larsen

State Authorised Public Accountant State Authorised Public Accountant

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5. Management Review

5.1 Summary

MYC4 started 2010 in crisis, yet came out of 2010 stronger, leaner and in a better position

than ever before to make the company successful.

The major challenge facing MYC4 at the beginning of 2010 was loss of Investor confidence

due to the non performance of and fraud amongst the African Partners during 2008 and 2009

resulting in significant losses for Investors. A related challenge was the inability of MYC4 to

raise sufficient funding to operate and develop the company whilst also retaining all of the

employees, resulting in significant staff reductions throughout 2010.

MYC4‟s focus in 2010 was not on growth but on improving the business model and the

quality of its portfolio and Partners. The objective was to demonstrate that MYC4 could

deliver the product intrinsic/imbedded in its business model i.e. the ability to invest in Af-

rica with the possibility of both a social and a financial return. This occurred at the same time

the company was downsizing to a bare minimum staff resulting in the MYC4 cost structure

being reduced by more than 50% during 2010. The efforts have proved to be successful

with Investments made on loans with current Providers, since mid 2009, showing a small pos-

itive financial return together with the social impact of/on the lives of thousands of Africans.

As expected, MYC4 came out of 2010 with a loss of DKK 8,185,877. This is better than the

budgeted loss of DKK 10,157,818 that was the objective at the beginning of 2010. MYC4 is a

young company and does not expect to reach break even before 3-4 years. The accumulated

losses over the years is seen as an investment by the Shareholders in building a profitable

and sustainable business that can serve its stakeholders with fair and transparent financial

services.

Whilst funding is in place for the current staffing level, the major challenge during 2011 will

be to find new Shareholders who are willing to fund the runway of the next 3-4 years towards

growth and profitability. More than EUR 8m has been invested into the company as equity

over the last 5 years and the platform today is unique in respect to a for-profit organization

that provides full transparency and access to information globally.

5.2 Main Activities 2010

MYC4 reduced staff from over 20 employees at the beginning of 2010 down to 5 at the

beginning of 2011, plus the Founders, Mads and Tim. The African organization was

restructured during 2010 with the hiring of a new East African Director; Eric Naivasha, and a

Credit Operations Manager; Titus Kuria, with both possessing extensive experience from

the financial sector. Chief Technology Officer; Steven Thomas undertook the additional role

of Deputy CEO with responsibility for day-to-day operations of the company, allowing Mads

and Tim to concentrate on fund raising and strategic partnerships.

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The IT department was closed down at the end of 2010 as the current version of MYC4.com

(Version 2.0) is stabile and because further IT development should be linked to MYC4‟s

growth when funding for the next 3-4 years is in place. The IT infrastructure is now hosted on

Amazon‟s EC2 „Cloud Computing‟ solution and an agreement has been made with a

consulting company who can step in and make mission critical changes to the system if

needed.

In spite of operating with these restrictions MYC4 has accomplished a lot!

MYC4 was able to make significant IT enhancements to the platform. Risk rating of Partners

in a 5 star system derived from the Partner‟s track record and level of risk sharing was

implemented, providing valuable guidance for Investors and incentivising Partners to im-

prove performance. Online Business Signup, allowing small businesses in Africa to sign-up

for loans online, was piloted in 2010 and gave Partners an important source of qualified leads

to grow their business. The largest development project, repayments restructuring, was

completed mid 2010, reducing the turnaround time on processing of repayments and

improving transparency. There were also a number of improvements for the on-line

Investors including better reporting and flexible bidding, allowing Investors to place both a

maximum and a minimum bid.

MYC4 made good progress with Supply Chain projects in 2010. In a joint project with

FDB/Coop, Danish consumers and MYC4 Investors can purchase goods from Africa in Co-

op‟s stores in Denmark and also invest in the farmers in Kenya and Uganda that produced

the goods. This project was profiled both in two large marketing campaigns sponsored by

FDB and BBC World News. The FDB/Coop Supply Chain project was instrumental in MYC4

becoming one of the World Challenge finalists. The Amajaro cacao Supply Chain project in

Ghana has also completed its pilot phase. The Amajaro loans are performing well and it is

planned to expand this project in 2011. Progress has been made on other Supply Chain pro-

jects such as the first health care loans to small drugstores and clinics in Kenya together with

Novartis and the first solar power loans together with Tujijenge and Barefoot – both projects

are expected to start in 2011 along with loans through a youth entrepreneurship project in

partnership with ILO (International Labour Organization).

Further, MyC4 introduced risk sharing agreement with partners and all partners accepted to

enter into such agreements. Though not all risk sharing agreements with partners were fully

implemented by the end of 2010 it is expected that all agreements will be in place during

first half of 2011. Introducing risk sharing agreements is a major change to the business

model and is perceived as an important step forward though there will still be room for

modifications and improvements.

MYC4 funded a total of EUR 1.8m in loans for nearly 1,000 micro- and small businesses

during 2010. After a slow Q1, monthly lending remained at a constant level for the rest of the

year at a level between EUR 150,000 and EUR 200,000. This was consistent with the objective

to focus on quality rather than growth of the portfolio during 2010.

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Of the approximate 18,000 Investors that have signed up on MYC4, over 2,000 are active in

any given month. This number remained stable throughout the majority of 2010 yet

increased to almost 3,500 in December when a small fee on idle accounts was introduced.

Other developments in 2010 include new office in Copenhagen and Nairobi and a new logo.

The new logo was developed by a freelance designer from Bosnia via a crowd sourcing

design website.

5.3 Partner Status

Whilst Investors generally lost money on loans disbursed between 2007-2009, investments

made since mid 2009, through current Providers, have provided online Investors with a small

positive return on the average. Loans disbursed in 2010 also appear to be performing well.

The Investors are, on a continuous basis, reminded that investing in Africa is risky. Whilst the

Investor losses due to defaults have been significantly reduced, the effects of currency

remain large and unpredictable. The direction of the US Dollar versus Euro remains the most

important indicator of the currency- impact for a Euro based investor.

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50,000

100,000

150,000

200,000

250,000

1 2 3 4 5 6 7 8 9 10 11 12

EUR

Loans disbursed

0

500

1000

1500

2000

2500

3000

3500

1 2 3 4 5 6 7 8 9 10 11 12

Users placing bids

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At the end of 2009 a number of non-performing Partners were suspended and a process of

re-engineering how MYC4 works with Partners commenced. This process has continued in

2010 with:

All Partners except one signing risk sharing agreements where they commit to cover

from 50% to 100% of the Investor losses in the case of Borrower defaults.

A realignment of Partner fee structures, ensuring that Partners earn most of their fees

as the loans pay back rather than at the time of disbursement (Partners can max.

charge 25% of their total fee on disbursement of the loan).

A strengthening of the East African team by hiring a new Director and a new Credit

Operations Manager with extensive sector experience.

Thorough spot checks of all Partners by the Credit Operations Manager, resulting in

more hands on monitoring, but also feed back to partners with important input to

capacity building.

Implementation of a 5 star risk scoring of Partners based on Partner performance and

level of risk sharing.

It is expected that MYC4 will continue to pursue legal action against some of the early

Partners including Ebony in Kenya as well as Notre Nation, Ivoire Crédit and Trium in Côte

d‟Ivoire. There is, however only very limited hope that any of these cases will result in the

recovery of lost funds. MYC4‟s lawyer is in negotiations with Birima and Youssou N‟Dour with

regard to covering defaulted loans in Senegal.

5.4 Overview of Portfolio by year-end 2010

Whilst approximately 40% of funds disbursed since the launch of the platform in Q4 2007 and

before Q3 2009, have defaulted, there appears to be an improving trend for loans disbursed

from Q4 2009 onwards. Of the funds disbursed in first half of 2010, less than 1% have

defaulted as at January 19, 2011 and 92% of the portfolio for this period is either already

repaid (64%) or repaying on schedule (28%) whilst 7% is more than 30 days late. Many of

these loans are covered by risk sharing agreements, which should reduce the impact on

Investors in case of default. Loans disbursed during the second half of 2010 are still too

young to assess, but 95% of the funds disbursed during this period are either repaid or

repaying on-time.

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The chart below shows the same data as the chart above, but only for active Partners;

Growth Africa, Micro Africa, Fusion, Tujijenge, Gatsby, and PRC. Again the data is as at

January 19, 2011. Since portfolio performance is largely determined by Partner quality, the

chart below may provide a better foundation for projecting future performance than the

chart above. Note; since no Partners were suspended in 2010, the 2010 numbers on the chart

below are identical to the previous chart.

The defaults within this portfolio are primarily due to two Partners; Growth Africa and

Gatsby. Both had some early problems, but are doing better now. Fusion has defaulted one

loan from Q4 2009, but this has since been covered by their 95% risk sharing agreement.

Micro Africa, Tujijenge and PRC have not had any defaults yet.

When viewed year-by-year there appears to be a small improvement from loans disbursed

in 2008 (15% default, 85% repaid) to loans disbursed in 2009 (9% default, 4% late, 3% on

time, 84% repaid). Note; part of the defaults on the 2009 portfolio has since been covered by

Fusion‟s risk sharing agreement, reducing the Investor loss so far from 9% to 7% on loans

from 2009. In 2010 less than 0.1% has defaulted so far, 6% is late, 52% are on time and 42%

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are repaid. These numbers are accurate as at January 19, 2011. The 2010 portfolio is young

and some deterioration should be expected in the future.

Ignoring the effects of currency for a moment, investments made since Q2 2009 through

current Providers have earned more on interest than they have lost to defaults every quarter,

except during Q4 2009. However, Q4 2009 is also positive now that Fusion has covered their

risk sharing commitments.

The full picture, once the effects of currency are included, is less positive. In general the

strengthening Euro against USD, had resulted in currency losses for Investors. When adding

together the effects of interest, currency and defaults, Investors are earning a net positive

return on loans disbursed in Q2, Q3 2009 and Q1 2010.

The total portfolio disbursed since Q2 2009 by current Providers shows a small net gain of

0.7%. For a USD-based investor the outcome looks much better. The 2010 portfolio is still

young, so additional defaults on this portfolio should be expected as the portfolio ages and

currency fluctuations will continue.

5.5 Social Impact

MYC4 is based on the firm belief that business is the key to trigger unrealized potential in

Africa, to accelerate economic growth and social development and thereby ultimately

eradicate poverty and related issues. This approach has been proven to have a great impact:

By giving access to capital, African businesses will be able to develop their businesses, cre-

ate growth and increase their income. They will be able to send their kids to school and to

the doctor; they will be able to employ more people, who will send their kids to school and

so on. In other words, prosperity will spread in ever increasing/widening circles.

MYC4 has developed a simple, yet functional impact score to help illustrate how many peo-

ple are impacted - directly as well as indirectly (e.g. employees and dependants respec-

tively) – for every MYC4 loan disbursed. The Impact Score is based on data being collected

during vetting of MYC4 Borrowers and takes into account the number of people who are in

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the direct surroundings of the Borrower, employees and families. It is assumed that each

business employs 4.5 people, including the entrepreneur. Each of these employees

has an average of 3.2 dependants who are indirectly impacted. All together that gives 18.9

people directly or indirectly impacted by each loan. This means that MYC4 loans, by year

end 2010, has had an impact on more than 100,000 people in Africa since launch in 2007.

5.6 Financial Results 2010

MYC4s focus on 2010 was on improving the quality of the portfolio and reducing operational

costs.

Operations were scaled back significantly in 2010 compared to 2009. Fee income was

reduced from DKK 956k in 2009 to DKK 352k in 2010, reflecting a corresponding decrease in

the outstanding loan balance. Costs were also sharply reduced as the company downsized

and the resulting operating loss for 2010 was DKK 9.4m before tax. This is in line with

expectations and a significant reduction DKK 20.2m before tax in 2009.

The company has lost over 50% of its share capital resulting in a negative DKK 1.4m at year

end. The share capital is expected to be re-established before 30th June 2011 by the

conversion of loans from major shareholders to equity to the value of DKK 3.0m.

5.7 Outlook for 2011

As it enters its fourth year of operations the three main business challenges faced by MYC4

are long term funding, profitability and risk.

Funding for 2011, with the current staffing and at the current cost level, is in place and MYC4

still expects to develop and grow the company during 2011. MYC4 will continue to manage

the current Partners as well as signing up new Partners to the platform. When additional

funding is found for 2011 and the years onwards it will be used to strengthen the team with

additional financial services skills, further development and professionalization of processes

and platform, developing new products for businesses in Africa and investors as well as

hiring additional resources to drive growth both on the borrower and investor side.

MYC4 is a young company and it is not expected to be profitable for a few more years, yet

growing the profitability and revenue income base is a key focus area for 2011. Recently a

new fee on one year old (only) idle Investor accounts was implemented as well as an

increase in MYC4‟s fees by introducing a 2% closing fee to the African businesses on all new

loans from February 1, 2011. The increase in revenue combined with the recent staff

reductions will not be enough to make MYC4 profitable in 2011, yet it is expected to triple

the revenue and bring MYC4 a step closer.

Risk remains a fact of life when lending money to micro and small businesses, especially in

Africa. The steps that were taken to address risks in 2010 appear to be bearing fruit. Focus

will remain on reducing risk and improving Investor returns during 2011, but risk is inherent

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in MYC4‟s mission of funding the un-banked individuals and the under-banked small

business in Africa. Investors using MYC4 to invest in African businesses should be aware of

this risk and further MYC4 advocates that private Investors should never invest more than

they can afford to lose.

In spite of the challenges facing MYC4, the need for MYC4 is enormous. Even with the

limited resources there are opportunities for growth, improvement, innovation and impact

during 2011. A number of exciting projects are on the way/in the pipeline including health

care, solar power, agriculture and youth entrepreneurship. Further MYC4 signed an

agreement with Makao Mashinani Ltd (MML) to fund low cost housing for slum dwellers.

MYC4 is looking forward to seeing this and other projects unfold during 2011.

5.8 Events after the Balance Sheet Date

No further events have occurred after the balance sheet date to this date, which would

influence the Annual report.

17

6. Accounting Policies

This annual report has been prepared in accordance with the provisions of the Danish

Financial Statements Act governing reporting class B enterprises with addition of a few

provisions for reporting class C enterprises.

The accounting policies applied for this annual report is consistent with those applied last

year.

Recognition and measurement

Assets are recognized in the balance sheet when it is probable as a result of a prior event

that future economic benefits will flow to the Company, and the value of the asset can be

measured reliably.

Liabilities are recognized in the balance sheet when the Company has a legal or constructive

obligation as a result of a prior event, and it is probable that future economic benefits will

flow out of the Company, and the value of the liability can be measured reliably.

On initial recognition, assets and liabilities are measured at cost. Measurement subsequent

to initial recognition is effected as described below for each financial statement item.

Anticipated risks and losses that arise before the time of presentation of the annual report

and that confirm or invalidate affairs and conditions existing at the balance sheet date are

considered at recognition and measurement. Income is recognized in the income statement

when earned, whereas costs are recognized by the amounts attributable to this financial

year.

Foreign currency translation

On initial recognition, foreign currency transactions are translated applying the exchange

rate at the transaction date. Receivables, payables and other monetary items denominated in

foreign currencies that have not been settled at the balance sheet date are translated using

the exchange rate at the balance sheet date. Exchange differences that arise between the

rate at the transaction date and the one in effect at the payment date or the rate at the

balance sheet date are recognized in the income statement as financial income or financial

expenses. Property, plant and equipment, intangible assets, inventories and other non-

monetary assets that have been purchased in foreign currencies are translated using

historical rates.

6.2 Income statement

Revenue

Revenue is taken to income as the customer‟s pay the fees.

Other external expenses

Other external expenses comprise expenses for sale, marketing, administration, premises,

bad debts, etc.

18

Other external expenses also include research costs, costs of development projects that do

not meet the criteria for recognition in the balance sheet.

Staff costs

Staff costs comprise salaries and wages as well as social security costs, pension

contributions, etc for the Company‟s staff.

Financial income and expenses

These items comprise interest income and expenses, realized and unrealized capital gains

and losses on payables and transactions in foreign currencies, as well as tax surcharge and

tax relief under the Danish Tax Prepayment Scheme. Interest expenses and other financial

expenses for manufacturing assets are not included in the cost of assets, but are recognized

in the income statement as incurred.

Income taxes

Tax for the year, which consists of current tax for the year and changes in deferred tax, is

recognized in the income statement by the portion attributable to the profit for the year.

The current tax payable or receivable is recognized in the balance sheet, stated as tax

calculated on this year‟s taxable income, adjusted for prepaid tax.

Deferred tax is recognized on all temporary differences between the carrying amount and

tax-based value of assets and liabilities, for which the tax-based value of assets is calculated

based on the planned use of each asset.

Deferred tax assets, including the tax base of tax loss carry-forwards, are measured at the

value at which the asset is expected to be realised, either by elimination in tax on future

earnings or by set-off against deferred tax liabilities.

The Company is jointly taxed with its Parent and the entire Parent's other Danish

subsidiaries. The current income tax is allocated among the jointly taxed companies

proportionally to their taxable income (full allocation with a refund concerning tax losses).

6.3 Balance sheet

Intangible assets

Intangible assets comprise uncompleted and completed development projects. Other

intangible assets comprise uncompleted and completed development projects with related

intellectual property rights, acquired intellectual property rights and prepayments for

intangible assets.

Development projects on clearly defined and identifiable products and processes, for which

the technical rate of utilization, adequate resources and a potential future market or

development opportunity in the enterprise can be established, and where the intention is to

manufacture, market or apply the product or process in question, are recognized as

intangible assets. Other development costs are recognized as costs in the income statement

as incurred.

19

The cost of development projects comprises costs such as salaries and amortization that are

directly and indirectly attributable to the development projects. Financing costs are not

included in cost.

Completed development projects are amortized on a straight-line basis using the estimated

useful lives of the assets. The amortization period is five years.

Intangible assets are written down to the lower of recoverable amount and carrying amount.

Equipment

Other fixtures and fittings, tools and equipment are measured at cost less accumulated

depreciation. Cost comprises the acquisition price, costs directly attributable to the

acquisition, and preparation costs of the asset until the time when it is ready to be put into

operation. Financing costs are recognized in the income statement.

The basis of depreciation is cost less estimated residual value after the end of useful life.

Straight-line depreciation is made on the basis of the following estimated useful lives of the

assets: Other fixtures and fittings, tools and equipment: 3-5 years.

Equipment is written down to the lower of recoverable amount and carrying amount.

Receivables

Receivables are measured at amortized cost, usually equaling nominal value less provisions

for bad debts.

Other investments

Securities recognized under current assets comprise investments on the MYC4 portal. The

investments are measured at fair value at the balance sheet date.

Prepayments Received from Investors

Prepayments received from Investors relate to cash transactions received into the MYC4 A/S

Investor bank accounts subsequent to the transfer of account balances to the newly created

Investor bank accounts within the Foundation. These funds have since been transferred to

the Foundation bank accounts in 2010.

Dividends

Dividends are recognized as a liability at the time of adoption at the general meeting. The

proposed dividends for the financial year are disclosed as a separate item in equity.

Other provisions

Other provisions comprise anticipated costs of non-recourse guarantee commitments.

Other provisions are recognized and measured as the best estimate of the expenses

required to settle the liabilities at the balance sheet date. Provisions that are estimated to

mature more than one year after the balance sheet date are measured at their discounted

value.

20

Lease commitments

Lease payments on operating leases are recognized on a straight-line basis in the income

statement over the term of the lease.

Other financial liabilities

Other financial liabilities are measured at amortized cost, which usually corresponds to

nominal value.

21

7. Income Statement for 2010 2010 2009

Notes DKK DKK’000 ____ ___________ _______

Revenue 351.587 956

Staff costs 1 (4.404.417) (7.862)

Other external expenses (2.827.731) (11.032)

Depreciations 2 (2.406.512) (2.279)

___________ _______

Operating profit/loss (9.287.073) (20.217)

Financial income 24.598 66

Financial expenses (107.862) (149) ___________ _______

Profit/loss before tax (9.370.337) (20.300)

Tax on profit/loss regarding previous year (1.184.460) 2.093

Tax on profit/loss for the year 3 0 2.500 ___________ _______

Net profit/loss for the year (8.185.877) (15.707)

___________ _______ ___________ _______

Proposed distribution of profit/loss

Retained earnings (8.185.877)

___________

(8.185.877)

22

8. Balance sheet at 31 December 2010 2010 2009

Notes DKK DKK’000 ____ ___________ _______

Development costs 4 5.729.286 7.187 ___________ _______

Intangible assets 5.729.286 7.187 ___________ _______

Other fixtures and fittings, tools and equipment 5 147.430 261 ___________ _______

Property, plant and equipment 147.430 261 ___________ _______

Fixed assets 5.876.716 7.448 ___________ _______

Receivables from group enterprises 0 19

Trade receivables 458.261 569

Income taxes receivable 0 2.500

Other receivables 1.389.141 1.396 ___________ _______

Receivables 1.847.402 4.484 ___________ _______

Investments on MYC4 0 116 ___________ _______

Current asset investments 0 116 ___________ _______

Cash 745.539 1.768 ___________ _______

Not invested investor payments 26.697 640 ___________ _______

Current assets 2.619.638 7.008 ___________ _______

Assets 8.496.354 14.455 ___________ _______ ___________ _______

23

8. Balance sheet at 31 December 2010 continued 2010 2009

Notes DKK DKK’000 ____ ___________ _______

Share capital 5.478.050 5.478

Retained earnings (6.873.230) 1.313 ___________ _______

Equity 6 (1.395.180) 6.791 ___________ _______

Other provisions 979.976 980 ___________ _______

Provisions 979.976 980 ___________ _______

Bank debt 68.621 35

Payables to group enterprises 3.075.000 0

Trade payables 120.964 407

Prepayments received from investors 0 888

Other payables 5.646.973 5.354 ___________ _______

Short-term liabilities other than provisions 8.911.558 6.684 ___________ _______

Liabilities other than provisions 9.891.534 6.684 ___________ _______

Equity and liabilities 8.496.354 14.455 ___________ _______ ___________ _______

Contingent liabilities, etc. 7

Other notes 8-9

24

Notes 2010 2009

DKK DKK’000 ___________ _______

1. Staff costs

Salaries and wages 5.155.613 8.709

Other social security costs 84.554 118 ___________ _______

5.240.167 8.827 ___________ _______

Activation of development costs (835.750) (966) ___________ _______

4.404.417 7.861

Average number of employees 9 20 ___________ _______

2. Depreciation

Development costs 2.293.139 2.126

Other fixtures and fittings, tools and equipment 113.373 153 ___________ _______

2.406.512 2.279 ___________ _______

3. Tax on profit/loss for the year

Current tax 0 (2.500)

Change in deferred tax 0 0

Change in deferred tax as a result of the reduction in the income tax rate 0 0 ___________ _______

0 (2.500) ___________ _______

The Company has a deferred tax asset relating to losses in 2006-2010. The deferred tax asset is not

recognized in the balance sheet, cf. accounting policies.

Development

costs

DKK ___________

4. Intangible assets

Cost at 01.01.2010 10.629.946

Additions 835.750 ___________

Cost at 31.12.2010 11.465.696 ___________

25

Notes continued

Depreciation at 01.01.2010 3.443.271

Depreciation for the year 2.293.139 ___________

Depreciation at 31.12.2010 5.736.410 ___________

Carrying amount at 31.12.2010 5.729.286 ___________

Other

fixtures,etc

DKK ___________

5. Equipment

Cost at 01.01.2010 544.612

Additions 0

Disposal 0 ___________

Cost at 31.12.2010 544.612 ___________

Depreciation at 01.01.2010 283.810

Depreciation for the year 113.372

Depreciation disposal 0 ___________

Depreciation at 31.12.2010 397.182 ___________

Carrying amount at 31.12.2010 147.430 ___________

Share Retained

capital earning Total

DKK DKK DKK ___________ ___________ ___________

6. Equity

Equity at 01.01.2010 5.478.050 1.312.647 6.790.697

Capital increase 0 0 0

Profit/loss for the year 0 (8.185.877) (8.185.517) ___________ ___________ ___________

Equity at 31.12.2010 5.478.050 (6.873.230) (1.395.180)

___________ ___________ ___________

26

Share capital consists of shares at DKK 1,000 or multiples of these. The shares have not been divided

into classes.

Notes continued 2010

DKK ___________

Changes in share capital since the Company's establishment on 19.05.2006:

Contribution on establishment 500.000

Capital increase 2006 1.240.000

Capital reduction 2006 to cover loss (300.000)

Capital increase 2007 2.400.000

Capital increase 2008 1.024.000

Capital increase 2009 614.050 ___________

Share capital at 31.12.2010 5.478.050

7. Contingent liabilities, etc.

The Company has no contingent liabilities at the reporting date in comparison to DKK 613,000 at

31.12.2009 which related to an interminable rent obligation.

8. Ownership

The Company has registered the following shareholders to hold more than 5% of the voting share

capital or of the nominal value of the share capital:

Kjaer Group A/S, Groennemosevej 6, DK-5700 Svendborg

The Way Forward ApS, Groennemosevej 6, DK-5700 Svendborg

casa-share ApS, Ved Kanalen 1, DK-1413 Copenhagen K

Dutch Oak Tree Foundation, 2 Temple Back East, Temple Quay, Bristol, BS 1 6EG, UK

9. Consolidation

MYC4 A/S is included in the consolidated financial statements of The Way Forward ApS, Central

Business Registration No 25 47 31 59.